Restrictions of Third-Party Platforms within Selective Distribution Systems

Abstract

Third-party platforms, such as Amazon Marketplace, have not only brought a wider variety of choice to consumers, but most importantly prompted a fierce intra-brand and price competition between various suppliers and distributors resulting primarily in a lower price level. However, this development particularly affected suppliers of luxury products, who were prompted to protect the brand image and price level of their products by means of selective distribution. As a result, distributors within such distribution systems were prohibited from selling products via such platforms. As is the case for most vertical restraints, neither the European Commission nor the EU courts have dealt with this issue in their decisional practice. On the other hand, restrictions of third-party platforms have been subject to controversial case law in Germany, though the final word on the issue has still not been spoken. Against this background, this article examines the compatibility of the absolute ban of third-party platforms within selective distribution systems, as well as qualitative requirements that may exist if they are allowed with EU Competition law.